Pension Plans and Other Retirement Benefits

9 Months Ended

Nov. 02, 2019

Pension Plans and Other Retirement Benefits

Presented below is financial information relating to TJX’s funded defined benefit pension plan (“qualified pension plan” or “funded plan”) and its unfunded supplemental pension plan (“unfunded plan”) for the periods shown:


	Funded Plan						Unfunded Plan
	Thirteen Weeks Ended						Thirteen Weeks Ended
In thousands	November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018
Service cost	$	11,415	$	10,781	$	440	$	572
Interest cost	13,149		12,837		871		994
Expected return on plan assets	(18,630)		(17,468)		—		—
Amortization of net actuarial loss and prior service cost	5,556		3,241		471		914
Expense related to current period	$	11,490	$	9,391	$	1,782	$	2,480
Pension settlement charge	—		36,122		—		—
Total expense	$	11,490	$	45,513	$	1,782	$	2,480


	Funded Plan						Unfunded Plan
	Thirty-Nine Weeks Ended						Thirty-Nine Weeks Ended
In thousands	November 2, 2019		November 3, 2018		November 2, 2019		November 3, 2018
Service cost	$	33,513	$	34,007	$	1,544	$	1,794
Interest cost	39,129		40,767		2,805		2,700
Expected return on plan assets	(55,606)		(59,392)		—		—
Amortization of net actuarial loss and prior service cost	14,574		9,469		2,343		2,556
Expense related to current period	$	31,610	$	24,851	$	6,692	$	7,050
Pension settlement charge	—		36,122		—		—
Total expense	$	31,610	$	60,973	$	6,692	$	7,050

TJX’s policy with respect to the funded plan is to fund, at a minimum, the amount required to maintain a funded status of 80% of the applicable pension liability (the Funding Target pursuant to the Internal Revenue Code section 430) or such other amount as is sufficient to avoid restrictions with respect to the funding of nonqualified plans under the Internal Revenue Code. We do not anticipate any required funding in fiscal 2020 for the funded plan. We anticipate making contributions of $4.8 million to provide current benefits coming due under the unfunded plan in fiscal 2020.

The amounts included in recognized actuarial losses in the table above have been reclassified in their entirety from accumulated other comprehensive income to the Consolidated Statements of Income, net of related tax effects, for the periods presented.

During the third quarter of fiscal 2019, TJX annuitized and transferred current pension obligations for certain U.S. retirees and beneficiaries under the funded plan through the purchase of a group annuity contract with an insurance company. TJX transferred $207.4 million of pension plan assets to the insurance company, thereby reducing its pension benefit obligations. The transaction had no cash impact on TJX but did result in a non-cash pre-tax pension settlement charge of $36.1 million, which is reported separately on the consolidated statements of income. As a result of the annuity purchase the Company re-measured the funded status of its pension plan as of September 30, 2018. The assumptions for pension expense for fiscal 2019 includes a discount rate of 4.00% through the measurement date and 4.40% thereafter. The expected rate of return on plan assets is 6.00% through the measurement date and 6.00% thereafter. The discount rate for determining the obligation at the measurement date was 4.40%.